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A Guide To Breaking Up With Your Bank

You’ve decided: It’s time to ditch your bank. But are you ready to make the switch?

There are plenty of reasons for wanting to change banks. Maybe you’re fed up with paying ATM fees, so you want a bank with branches closer to home or work. Or you found an account with a credit union or a smaller bank that promises better customer service or charges fewer fees.

Whatever the deciding factor, many people who think about changing banks end up staying put — often because of worries about the work involved. “It takes a little bit of time and effort,” says Greg McBride, chief financial analyst for “There’s a natural tendency to cringe at the thought of it.”

Indeed, people who aren’t careful when they make the change can face steep fees for missed payments, unnecessary money transfers and overdrafts. Here are some tips for breaking up with your bank.

Tell Your Current Bank What’s Coming

This gives them a chance to let you know of any new offerings that might match what you’re looking for, says Mike Townsend, a spokesman for the American Bankers Association. It also lays the groundwork for closing the account, which can take a few days to a few months.


Open the New Account

That’s right, before you close the old one. This gives you time to set up direct deposit and to give merchants your new billing information.


Don’t Close the Old Account Right Away 

While you should stop using your old checking account right away, you should keep it open for at least another 30 days while you transition to the new account, says Mike Moebs, economist  and chief executive of Moebs Services. “Sixty days is better,” he says. Some banks even charge fees for closing accounts before a certain amount of time, according to


Ask for a Switch Kit

Your new bank or credit union may offer what’s called a “switch kit,” a step-by-step checklist of the forms you’ll need to transition to your new account, Townsend says.  That will include letters for setting up direct deposit and forms that can make it easier to redirect automatic payments being charged to the checking account. These kits can be obtained online, in the branch or through the mail.


Make Sure All Automatic Bills are Moved Over

Keep any eye out for any bills still being charged to your old account and update the payment information, Moebs says. Make sure direct deposit and other transactions are clearing smoothly through your new account. Alex Matjanec, co-founder of, recommends checking the past year’s worth of statements to create a list of transactions that may come up. Some examples of bills to watch for: utilities, credit cards, loans, gym memberships and payments that may come up  once or twice a year like charitable donations and insurance payments.


Move Over Whatever Cash Is Left

After 30 days or so of zero activity on your old checking account, have the remaining balance transferred to your new account, says McBride of Transfers from one financial institution to another are typically handled through the what’s known as the Automatic Clearing House, or ACH, an electronic process that normally takes three business days — or five regular days if you put the request in on a Friday.


Get Written Confirmation

Ask your old bank or credit union to give you a letter that confirms the account was closed, Matjanec says. You should also cut up old debit cards and checkbooks to be sure you don’t inadvertently use them later, he says.


If you're breaking up with your bank, join the USC Credit Union today! Learn how using the link below.

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Source: Marte, Jonnelle. "A Guide to Breaking up with Your Bank." Washington Post. The Washington Post, 14 Sept. 2014. Web. 13 Feb. 2015.

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